Newstrack

Finmin may review plane import duty

Raghvendra Rao - New Delhi

The finance ministry is likely to review its decision of imposing a customs duty of 23 per cent on import of aircraft by chartered operators. Currently, only aircraft imported by scheduled operators and the government are exempt from this duty, which includes three per cent basic customs duty, 16 per cent of countervailing duty and four per cent of special additional duty.

The move follows the civil aviation ministry's plea that levying such a duty on import of aircraft by non-scheduled, chartered and helicopter operators, flying training institutions and industrial houses contradicted the government's stated objective of promoting connectivity to remote areas and tourism and was bound to increase cost of operations.

Civil aviation minister Praful Patel had recently written to the finance minister P Chidambaram saying that the introduction of this customs duty will make the helicopter services, operated by non-scheduled operators in areas like Andamans & Nicobar Islands, Lakshadweep, the Northeast region and for medical evacuation purposes, expensive.

Even as the government wanted to promote flying training institutions in the country to tackle the shortage of pilots, the levy on import of aircraft for such institutions was being enhanced substantially. "Even established institutes like Indira Gandhi Rashtriya Uran Akademi (IGRUA) will need increased budgetary support to enhance their fleet," Patel had written.

In its reply, the finmin told the civil aviation ministry that the budgetary proposal to impose import duties on aircraft was intended to do away with the full exemption provided on all aircraft.

The finance ministry further said that with the implementation of a liberalised air transport policy by the government in recent years and consequent increased imports of aircraft, there was no rationale for continuing with a nil duty regime for all aircraft.